The USD/CAD holding 1.3000 after trade war fears hit markets
Today we want to have a look at the USD/CAD. After focussing 1.3000 into the end of the second quarter, the currency pair has seen a short rebound, stabilising above the psychologically relevant level.
One of the main reasons for the Loonie not taking on further bullish momentum, seems to be that the recent trade war fears, which not only triggered higher volatility (note: increasing volatility is usually CAD negative) but saw Crude Oil further decreasing after it got hit by around 7% last Thursday, when markets were threatened by global growth concerns after US President Donald Trump tweeted about more tariffs on Chinese goods from September onwards.
While this overall outlook makes it unlikely to see a drop below 1.3000 in the near future, or at least the short-term, the USD/CAD could probably see a push lower.
Today's release of the Ivey PMI, giving an impression on Canada's Business Confidence, is expected to come in at 53, slightly above last months' reading at 52.4.
A better-than-expected reading could trigger CAD strength, since it would underline the hints from the BoC earlier in July where the central bank signalled that it currently sees no reason to follow any move by the Fed to lower rates.
That means on the other hand in our opinion that any disappointing reading could result in further USD/CAD gains back above 1.3300.
The technical key level seems to be found around 1.3260/3300: recapturing this region with backwind from a weak Ivey PMI reading would 1.3430/50 as a target on the downside.
Finding resistance here, on the other hand, leaves the currency pair vulnerable to another stint down to 1.3000/3050.
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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
One of the main reasons for the Loonie not taking on further bullish momentum, seems to be that the recent trade war fears, which not only triggered higher volatility (note: increasing volatility is usually CAD negative) but saw Crude Oil further decreasing after it got hit by around 7% last Thursday, when markets were threatened by global growth concerns after US President Donald Trump tweeted about more tariffs on Chinese goods from September onwards.
While this overall outlook makes it unlikely to see a drop below 1.3000 in the near future, or at least the short-term, the USD/CAD could probably see a push lower.
Today's release of the Ivey PMI, giving an impression on Canada's Business Confidence, is expected to come in at 53, slightly above last months' reading at 52.4.
A better-than-expected reading could trigger CAD strength, since it would underline the hints from the BoC earlier in July where the central bank signalled that it currently sees no reason to follow any move by the Fed to lower rates.
That means on the other hand in our opinion that any disappointing reading could result in further USD/CAD gains back above 1.3300.
The technical key level seems to be found around 1.3260/3300: recapturing this region with backwind from a weak Ivey PMI reading would 1.3430/50 as a target on the downside.
Finding resistance here, on the other hand, leaves the currency pair vulnerable to another stint down to 1.3000/3050.
Ready to take your trading to the next level? Find out how in Admiral Markets’ new webinar series Trading Spotlight, where our trading experts will be discussing risk management, trading psychology, and their top strategies for trading the world’s most popular markets - admiralmarkets.com/e.../trading-spotlight-1
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
